“Where did you get that coffee?” Some ask, but what about the other question: “How did you get that coffee?” Companies rely on coffee farmers from other countries for their beans. There are two main methods of sourcing coffee: Direct and Fair trade, but what are they and how do they differ?
Direct trade coffee is coffee that is sourced in which roasters and sellers buy directly from farmers. Fair trade, on the other hand, uses organizations that act as a mediator that help settle fair prices between farmer and seller, putting the farmers first.
The direct trade method is used to assure quality and to not have any middlemen get in between the grower and seller. The first goal of direct trade is quality coffee and company values, which helps the farmers in the long run.
Want to know more? Keep reading to find the pros and cons of direct and fair trade and why they are used.
What is Direct Trade Coffee?
Direct Trade is a method that coffee companies use when buying, also known as sourcing, from farmers. The direct trade process is when coffee roasters/sellers buy beans straight from the farmers.
There are no third-party organizations getting in between the two of them. With the ultimate goal of the sellers is quality and to establish a relationship with the growers.
How Does Direct Trade Work?
One of the hallmarks of direct trade is the absence of middlemen. Coffee is grown in tropical countries, so normally farmers sell their coffee to an exporter, who ships their beans out of the country to an importer, who brings the shipment into a country like the U.S. where the coffee distributors buy the beans to process and sell.
In a direct trade deal, coffee distributors meet with the farmers to strike a deal where they buy straight from them. Since no organization oversees direct trade, standards are also set by the distributors themselves.
It is the growers’ responsibility to produce coffee that is up to par with the seller’s standards, and it’s the responsibility of the sellers to pay their producers fairly.
How do Sellers and Growers Interact?
The big concern for sellers is quality, by offering better prices for the farmer’s coffee, farms will strive to ensure that their coffee is the best they can grow.
This exchange ultimately is good for the well-being of the farmers and companies. Which overall is good for the long-term sustainability of both.
How Do a Company’s Values Affect Direct Trade?
Direct trade more or less focuses on the coffee company’s values. For example, a company may be concerned about the problem of destroying rainforests for coffee growing.
Following this value, they may choose to only buy beans from producers who are Rainforest Alliance Certified.
In another example, sellers may want to support smaller growers and will buy directly from them.
What matters most in direct trade is transparency, communication, and a strong relationship between seller and grower. Fostering a dedication to accountability, environmental responsibility, fair wages, and good ethical business practices.
What is Fair Trade?
When you go out to buy your groceries and coffee you’ll sometimes find some products proudly labeled with a little stamp or graphic that says something along the lines of “Fair Trade Certified”.
But what does it mean when your coffee is fair trade coffee?
Fair trade is a practice and set of standards set up by fair trade organizations. These organizations work with farm cooperatives to establish prices and help ensure ethical practices.
Fair trade promotes equality between sellers and growers.
How Does Fair Trade Work?
Fair trade organizations work with farm co-ops to establish a minimum price that is fair for the growers by basing it on the current market values of coffee.
Once a price is agreed on, the organization will pay some of the price upfront so the farmers will have some money until the process is complete.
This methodology puts farmers’ well-being at the forefront of the process.
With importers, exporters, and other parties coming in second.
What Are the Benefits of Fair Trade?
The practices of fair trade are very beneficial to small farmers in developing countries. They make sure that coffee is sourced ethically, enforcing laws against things like child labor and fair pay for workers.
Organizations may also help struggling farmers by providing financial help to grow or support their families.
Through the use of fair trade, farmers will also invest their profits into helping their communities such as buying needed resources for schools and medical care.
How Do Companies Become Fair Trade Certified?
In order to apply for fair trade certification, coffee companies need to meet the standards set by fair trade associations, like Fairtrade International.
Once they become members they must pay membership fees and go through annual assessments as well as peer reviews by other companies to stay Fair Trade Certified.
What Are the Big Differences Between Direct Trade and Fair Trade?
In summary, the key differences between these two are what they prioritize.
Direct trade focuses on a close relationship between grower and seller. The seller buys coffee from the grower without any third party involvement. The main goal is having a quality product which yields higher pay and sustainability for the farmers.
Fair trade, however, is a set of regulations made by organizations that prioritize farmers’ livelihood through third party involvement. Companies need to apply for fair trade status, unlike direct trade which has no organizations. The goal of fair trade is to help the growers first, and then they will produce quality product as a result.
These methods of sourcing coffee often are up to your individual preference. How the coffee is sourced can be a factor in overall quality and experience. It is best to always research coffee companies in order to buy coffee confidently.